Senate Bill No. 3
(By Senator Blatnik)
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[Introduced January 12, 1994; referred to the Committee
on the Judiciary.]
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A BILL to amend article seventeen, chapter thirty-three of the
code of West Virginia, one thousand nine hundred thirty-one,
as amended, by adding thereto a new section, designated
section nine-a; and to amend and reenact section twelve of
said article, all relating to the payment of insurance
claims for fire damage to structures located within
municipal boundaries; requiring county sheriffs to provide
a certificate showing delinquent taxes, assessments,
penalties and charges against the property including costs
incurred by municipal corporations in removing, repairing or
securing a structure damaged by fire; and requiring
insurance companies to pay certain penalties and costs out
of insurance proceeds.
Be it enacted by the Legislature of West Virginia:
That article seventeen, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as amended,
be amended by adding thereto a new section, designated sectionnine-a; and that section twelve of said article be amended and
reenacted, all to read as follows:
ARTICLE 17. FIRE AND MARINE INSURANCE.
§33-17-9a. Disbursement of fire insurance proceeds.
(a) An insurance company may not pay a claim for fire damage
to a structure located within a municipal corporation in this
state if the amount recoverable for the fire loss to the
structure under all policies exceeds five thousand dollars,
unless the company is furnished with a certificate or bill
pursuant to subsection (b) of this section, and complies with the
procedures set forth in subsections (c) and (d) of this section.
(b) A claimant for proceeds from an insurance policy
covering a structure or structures located within the boundaries
of a municipal corporation shall, by written request including
description of the property for tax purposes and the date agreed
upon as the date of the receipt of a proof of loss, obtain from
the sheriff and provide to the insurance company, either:
(1) A certificate showing that there are no delinquent
taxes, assessments, penalties or charges against the property and
that a municipal corporation has not certified to the sheriff any
costs incurred by the municipal corporation to remove, repair or
secure structures on the property; or
(2) A certificate and bill showing the amount of delinquent
taxes, assessments, penalties and charges against the property as
of the date specified in the request and showing, as of the date
of the sheriff's certificate, the amount of the total costs, ifany, incurred by a municipal corporation to remove, repair or
secure structures on the property that have been certified to the
sheriff.
The chief executive officer of a municipal corporation, or
his or her designee shall, for purposes of this section, certify
to the sheriff the total amount, if any, of the estimated costs
the municipal corporation expects to incur to repair, remove or
secure a structure damaged by fire.
(c)(1) Upon receipt of a certificate pursuant to subdivision
(1), subsection (b) of this section, the insurance company shall
pay the claim in accordance with the policy terms, unless the
loss agreed to among all named insurers and all companies equals
or exceeds sixty percent of the aggregate limits of liability on
all fire policies covering the structure or structures. In case
a loss equals or exceeds sixty percent of the aggregate limits of
liability on all fire policies, the insurance company, the
insured property owner and the municipal corporation shall follow
the procedures set forth in subsections (d) and (e) of this
section.
(2) Upon receipt of a bill pursuant to subdivision (2),
subsection (b) of this section, the insurance company shall
return the bill to the sheriff with the amount from the insurance
proceeds necessary to pay such taxes, assessments, penalties,
charges or costs as shown on the bill. The sheriff shall credit
this amount to the payment of the items shown in the bill.
(d) When the loss equals or exceeds sixty percent of theaggregate limits of liability on all fire policies covering the
structure or structures, the insurance company or companies shall
transfer from the insurance proceeds to the designated officer of
the municipal corporation: (1) One thousand dollars for each
twenty thousand dollars of a claim; or (2) the amount specified
in a signed West Virginia-licensed contractor's estimate of the
costs to remove, repair or secure a structure or structures.
This transfer shall be on a pro rata basis by all companies
insuring a structure or structures. Remaining policy proceeds
shall be disbursed in accordance with the policy terms.
After the designated insurance proceeds have been
transferred and prior to the municipal corporation initiating
steps to remove, repair or secure a structure or structures, the
insurance claimant may submit a West Virginia-licensed
contractor's signed estimate of the costs to remove, repair or
secure a structure or structures and the designated officer shall
return the amount of the fund in excess of the estimate to the
insurance claimant.
(e) Upon receipt of proceeds by the municipal corporation as
authorized by this section the designated officer shall place the
proceeds in a separate fund to be used solely as security against
the total cost incurred by the municipal corporation for
removing, repairing or securing the structure or structures.
When transferring the funds as required in subsection (d) of
this section, an insurance company shall provide the municipal
corporation with the name and address of the insurance claimantfor notification. The municipal corporation shall certify to the
insurance company and the claimant that the proceeds have been
received by the municipal corporation and that the following
procedures will be followed:
(1) No costs incurred. -- The fund shall be returned to the
insurance claimant when the structure or structures have been
repaired, removed or secured and proof is received by the
designated municipal officer that the municipal corporation has
not incurred a cost.
(2) Costs incurred. -- If the municipal corporation has
incurred any cost to repair, remove or secure a structure or
structures, the costs shall be paid from the fund. The
designated municipal officer shall transfer any remaining funds
to the insurance claimant.
Nothing in this subsection shall be construed to limit the
ability of a municipal corporation to recover any deficiency.
Nothing in this section shall be construed to prohibit a
municipal corporation and the insurance claimant from entering
into an agreement that permits the transfer of funds to the
claimant if another reasonable disposition of the damaged
property has been negotiated.
(f) Proof of payment by the company of proceeds under a
policy in accordance with subsection (d) of this section is
conclusive evidence of the discharge of its obligation to the
insured under the policy to the extent of the payment and of
compliance by the company with subsection (d) of this section.
(g) Nothing in this section shall be construed:
(1) To make an insurance company liable for any amount in
excess of proceeds payable under its insurance policy or for any
other act performed pursuant to this section;
(2) To make a municipal corporation or public official an
insured under a policy of insurance; or
(3) To create an obligation to pay delinquent property taxes
or unpaid removal liens or expenses other than as provided in
this section.
(h) An insurance company making payment of policy proceeds
under this section for delinquent taxes, structure removal liens
or removal expenses incurred by a municipal corporation shall
have the full benefit of the payment including all rights of
subrogation and of assignment.
(i) Municipal corporations may develop policies and
procedures to implement this section and in accordance with the
provisions of section sixteen, article twelve, chapter eight of
this code.
(j) This section should be liberally construed to accomplish
its purpose to deter the commission of arson and related crimes,
to discourage the irresponsible abandonment of fire damaged
property with its attendant threatening effects generally upon
the health and safety of the community and particularly upon the
adjacent property owners and occupants, and to prevent blight and
deterioration in the municipalities of this state.
§33-17-12. Payment discharges insurer.
If, at the time the proceeds under a policy of fire
insurance covering property in this state becomes payable, the
insurer has complied with the provisions of section nine-a of
this article and pays the proceeds to the person or persons
designated in the policy or contract or to a bona fide assignee,
the payment fully discharges the insurer from all claims under
the policy or contract. This section applies to all insurers,
including farmers' mutual fire insurance companies.
NOTE: The purpose of this bill is to require insurance
companies to apply certain proceeds from an insurance claim for
damaged structures within the boundaries of a municipal
corporation to the payment of delinquent taxes, assessments,
penalties and charges against the property and to cover any costs
incurred by a municipal corporation to remove, repair or secure
a damaged structure.
§33-17-9a is new and §33-7-12 has been completely rewritten;
therefore, strike-throughs and underscoring have been omitted.